Price of Gold – Fundamental Forecast, April 27, 2017
Gold futures weakened on Wednesday, but technical factors helped stop the price slide. Profit-taking and short-covering also contributed to the late session rebound. A reversal to the downside by U.S. equity markets after the release of President Trump’s disappointing tax plan also sent investors back into gold.
June Comex Gold futures finished the session at $1264.20, down $3.00 or -0.24%.
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Forecast
Despite holding the $1260.00 level on Wednesday, gold appears to be in trouble. The chart pattern is pretty clear that if this level fails as support, we could see a sharp break into $1247.70 and then $1236.00.
We could see a short-covering rally over the near-term, but this price action is likely to set up the next shorting opportunity. All week, we’ve seen investors exiting long positions. We’ve also seen sell stops getting hit. This next rally, however, is likely to attract real shorting pressure.
The problem with gold right now is that it’s lost several of the stories that carried it higher most of the year. On Sunday, it lost the French election. Throughout the week, investors turned back to risky assets. Now it looks like tensions over North Korea are easing.
Gold has had a lot of risk factors providing support, but now it looks like they are being priced out of the market.
I suspect we’ll see one more short-covering rally over the near-term, but that should be it for gold unless something unexpected occurs with the French presidential election or if tensions over North Korea re-emerge and escalate.